COMPENSATION FOR MISREPRESENTATION
The Act contains another, separate, provision for
compensation. If the court refuses an order for a new tenancy
and it later appears that the decision was induced by a misrepresentation
or concealment of material facts, the court may order the landlord
to pay the tenant compensation for any resulting damage or loss.
However, this provision does not apply where no application
is made to the court. So, no compensation is payable to a tenant
who made no application to the court for a new tenancy because
the landlord stated that he would oppose the tenancy on a ground,
say, that he intended to re-develop the property, and he misrepresented
the facts on which he was relying.
The Department, in accordance with the Law Commission's
recommendation, propose that the provision of compensation for
non-renewal of a tenancy as a result of misrepresentation should
be extended to apply where the tenant is induced not to apply
to the court or to withdraw his application for renewal.
Removal or reduction of a burden
At present a tenant cannot receive compensation
where he is induced by the landlord's misrepresentation not to
apply to the court for a new tenancy. Tenants are therefore put
to the unnecessary trouble and expense of making applications
for new tenancies, which they know will almost certainly to be
refused, in order simply to enforce their rights to compensation.
Moreover, the compensation rights may be lost through failure
to make an application because tenants may not realise that this
is necessary. This burden on tenants of having to start proceedings
unnecessarily to protect their right to compensation would be
Imposition of a new burden
A new burden is imposed on landlords in that the
right to compensation for misrepresentation is extended to cases
where the tenant is induced not apply to court, or to withdraw
his or her application to renew.
Re-enactment of existing burdens
The proposed order would re-enact the burden on the
landlord of liability for compensation in the case where the court
refuses an order for a new tenancy and it later appears that the
decision was induced by a misrepresentation or concealment of
Both the new and the existing burdens of liability
to pay compensation in cases of misrepresentation are clearly
proportionate to the benefit of discouraging any such misrepresentation,
or of compensating tenants who have been subject to it.
This aspect of the proposal would not remove any
necessary protection. The landlord will
be required to pay such sum as appears to the court to be sufficient
as compensation for the loss sustained by the tenant.